By Stephen Barr
Monday, October 2, 2006

Legislation that would permit the General Services Administration to revamp troubled operations and create a new purchasing service has been sent to the president for his signature.

Once the bill is signed, the GSA will roll out a new Federal Acquisition Service, which will combine the agency's Federal Supply Service and Federal Technology Service. Officials plan to have the FAS operating within 60 days after President Bush acts.

Sponsors of the legislation, including Reps. Thomas M. Davis III (R-Va.) and Duncan Hunter (R-Calif.) and Sens. Susan M. Collins (R-Maine) and Joseph I. Lieberman (D-Conn.), hope the reorganization will help improve the agency's financial controls and make for more efficient purchasing of services, equipment and supplies used by federal agencies.

In recent months, the GSA has been tagged as a problem agency. Its business began slumping in fiscal 2004, and the technology service began operating in the red. Some field offices were investigated for improper contracting activities; some federal agencies became dissatisfied with GSA services and took their business elsewhere.

Lurita Alexis Doan , who took office as the head of the GSA in May, is moving to restore morale at the agency and contends that most agencies would be better served if they stick to their primary missions and let the GSA handle procurement. She has recruited a commissioner for the new FAS, Jim Williams , an experienced project manager who has worked at the Department of Homeland Security and the Internal Revenue Service.

Most federal agencies rely on congressional appropriations for their programs, but GSA obtains most of its funding by contracting on behalf of federal agencies. It buys goods and services each year from the private sector and resells them to agencies, charging a fee for its management services.

The agency's technology service buys computers, software and telecommunications for the government, and the Federal Supply Service buys vehicles, property and general supplies. Congress hopes that consolidating the two services and their funding streams into the new FAS will help the GSA resolve its budget problems.

The GSA projects a loss of $96 million to $110 million for fiscal 2006 in the technology service but will not have a tally until financial statements are compiled in mid-November, officials said. Part of that loss stems from a decision to write off a $71 million in-house contract management system, GSA Preferred, that had not met expectations.

In hopes of breaking even in fiscal 2007, which began yesterday, the agency has cut costs -- dropping some internal projects, cutting back on travel and canceling some support contracts.

About 150 GSA employees have taken cash buyouts, which also will help reduce the agency's costs in the coming year. The GSA, which has about 13,000 employees, hopes to avoid staffing cuts if it can improve its financial outlook.

Sponsors of the reorganization legislation hope that creation of the FAS will help the GSA better coordinate how it buys and sells products and services. With the merger of the GSA's technology and general supply funds, officials expect more sales to federal customers. The two funds handle about $56 billion in annual sales and produce revenue of $7 billion to $8 billion to cover GSA operating expenses, officials said.

Congress has extended a test program for reimbursing federal employees who are directed to move to new duty stations. The experiment, authorized for four years, gives employees more flexibility in arranging their moves and, based on previous trial runs, should reduce the government's costs.

Under travel rules, employees are entitled to reimbursement for certain expenses, including real estate and settlement costs and the transportation and storage of household goods. The government provides relocation assistance to about 28,000 civil service employees a year at an estimated cost of more than $800 million, according to a Senate report accompanying the bill.

The FBI and U.S. Customs and Border Protection reported substantial savings when they allowed employees to volunteer for a fixed-rate reimbursement, the report said.

For example, Border Patrol agents were offered $5,000 to $20,000 as a lump-sum payment for relocating during a 2004-05 test project. The average cost for a move was $16,888 during that period, much less than the average historical cost of $72,000 under federal travel rules, the report said.

The bill, sponsored by Collins, has been sent to the president for his signature.

Stephen Barr's e-mail address isbarrs@washpost.com.